(Bloomberg) -- Another day, another tweet storm from Elon Musk that's sent Tesla Inc. shares tumbling.
The stock dropped as much as 6.6 percent as of 12:12 p.m. Friday in New York, after Musk fired off more than a dozen tweets targeting the Securities and Exchange Commission and short sellers the night before. He mocked the agency that he settled a lawsuit with only days earlier, referring to the regulator as the “Shortseller Enrichment Commission” and sarcastically quipping that it was “doing incredible work.”
The tweets may imperil a deal struck with the SEC on Saturday -- which isn't final -- that bars Musk from serving as chairman of the carmaker for three years as punishment for problematic posts he sent about taking Tesla private. As part of the deal, the company also has to implement procedures and controls to oversee Musk's communications, including his social media missives.
“At the very the least, they can read the riot act to Musk's lawyer,” said Stephen Crimmins, a former SEC enforcement lawyer who's now a partner at Murphy & McGonigle. “Beyond that, if they feel he hasn't lived up to his deal, they can theoretically seek to pull the settlement.”
Tesla shares are on track for their fourth consecutive daily decline and are down about 15 percent this year.
Representatives for the Palo Alto, California-based company didn't respond to requests for comment. Ryan White, an SEC spokesman, declined to comment.
| More on Musk |
|
The posts may test the boundaries of Musk's agreement not to deny wrongdoing and risk reviving stiffer forms of punishment. Last week, the SEC sought to prohibit him from serving as an officer of a public company. A federal judge still has to decide whether the penalties levied against the CEO are appropriate.
“Reading the mind of Elon Musk is beyond my ability, but he is soon to join the SEC in front of a federal judge to defend the recent settlement agreement,” said Stephen Diamond, an associate professor of law at Santa Clara University, who specializes in corporate governance. “If he doesn't want to put that deal at risk, he ought to pay attention to cars instead of Twitter.”
Musk also dragged BlackRock Inc. into his long-running dispute with short sellers, claiming that the fund manager was reaping heavy profits by lending shares they hold to this group of investors. BlackRock representatives declined to comment. The company held about 3.8 percent stake in Tesla as of the end of June, according to data compiled by Bloomberg.
It all started on Thursday at 4:16 p.m. New York time with a tweet that's racked up more than 29,000 likes and 4,400 retweets:
Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!
Just over an hour later, he followed up with replies to a concerned follower, seeking to reassure him of Tesla's long-term prospects:
Hang in there. If you are truly long-term, it will be fine.
Musk continued his tirade against short sellers by sending out another inflammatory post at 5:40 p.m. calling for their activities to be outlawed. He later reiterated his stance in a separate post that garnered more than 9,400 likes.
Exactly. Short-sellers are value destroyers. Should definitely be illegal.
At 6:52 p.m., he replied to a tweet he originally posted in 2012 in which he said he would “defend the right of shorts to exist” and that they were “often unreasonably maligned.” This one clocked close to 8,500 likes.
The last several years have taught me that they are indeed reasonably maligned
Musk resumed his posting on Friday, responding to a tweet telling him that not all short sellers are bad. He replied:
